Navigating the Bumpy Road of Electric Vehicle Stocks
The electric vehicle (EV) market has experienced a rollercoaster ride over the past few years, with Rivian Automotive (NASDAQ: RIVN) and Lucid Group (NASDAQ: LCID) being two prominent examples. Despite their promising starts, both companies have faced significant challenges, with Rivian’s shares plummeting 79% and Lucid’s dropping a staggering 92% over the past three years.
A Glimmer of Hope
However, amidst the turmoil, there are signs of optimism. Sales of electric vehicles in the U.S. rose 7% last year, reaching 1.3 million. This growth suggests that the EV market is still poised for long-term success, making it essential to identify the companies that will emerge stronger from this difficult period.
Lucid’s High-End Ambitions
Lucid’s luxury Air sedan has impressed automotive enthusiasts, earning prestigious awards such as MotorTrend’s 2022 Car of the Year and Top Gear’s 2024 Best Luxury EV. The Air’s impressive driving experience, luxurious interior, and 400 miles of estimated EPA range have garnered attention. However, despite its accolades, Lucid’s sales have been underwhelming, with revenue of just $200 million in the third quarter and net losses expanding to $992 million.
Rivian’s Production Woes
Rivian has also faced challenges, with production and delivery numbers falling short of expectations. The company made just 49,476 vehicles last year, down 13.5% from 2023, and deliveries rose only 3% to 51,579. However, Rivian’s management has addressed component shortages, which should improve production and deliveries in the future.
A Path Forward for Rivian
Rivian has made significant strides in reducing costs, cutting 35% of its material costs across its van, truck, and SUV production last year. The company expects to be gross profit positive in the fourth quarter, a crucial step towards narrowing its losses. Additionally, Rivian’s plans to release new, more affordable models, such as the R2 and R3, will help expand its customer base.
Comparing the Two
While both companies face challenges, Rivian’s management appears to be taking cost-cutting measures seriously and has a long-term plan for bringing new, more affordable vehicles to market. With a price-to-sales ratio of about 3, compared to Lucid’s 9.7, Rivian’s stock looks comparatively cheaper. However, it’s essential to remember that the electric vehicle industry is still in its nascent stages, and significant share price swings are likely ahead.
Investing in the Future
Before investing in Rivian Automotive, consider the broader market landscape. The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and Rivian Automotive wasn’t one of them. These top stocks have the potential to produce monster returns in the coming years.
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